Circular No. 11-LDTBXH/TT guiding the implementation of Decree No. 179/CP of the Government on wages for Vietnamese workers employed in foreign-invested enterprises and foreign or international organizations in Vietnam.

CIRCULAR

OF THE MINISTRY OF LABOR, INVALIDS AND SOCIAL AFFAIRS

Guidelines for implementing Decree No. 179/CP of the Government on wages for Vietnamese workers employed in enterprises with foreign investment and foreign or international organizations in Vietnam.

Implementing Decree No. 197/CP dated December 31, 1994 of the Government detailing and guiding the implementation of certain provisions of the Labor Code regarding wages, after exchanging opinions with the State Committee on Cooperation and Investment, the Vietnam General Confederation of Labor, and relevant Ministries and sectors; the Ministry of Labor - War Invalids and Social Affairs provides guidelines for the implementation of wages for Vietnamese workers employed in enterprises with foreign investment operating in export processing zones, industrial parks, and foreign or international organizations in Vietnam as follows:

The objects and scope of application of wages under this Circular are those specified in Clause 5, Clause 6, Article 1 of Decree No. 197/CP, specifically:

Enterprises with foreign investment according to the Law on Foreign Investment in Vietnam promulgated in 1987 and the Law Amending and Supplementing Certain Provisions of the Law on Foreign Investment in Vietnam dated June 30, 1990 and December 23, 1992;

1- Implementation Scope:

1. Object and scope of application:

Enterprises with foreign investment, joint ventures established and operating in export processing zones pursuant to Decree No. 332/CP dated October 18, 1991 of the Council of Ministers (now the Government) and in industrial parks pursuant to Decree No. 192/CP dated December 15, 1994 of the Government;

Economic and trade representative offices of foreign countries established and operating in Vietnam according to licenses issued by the Ministry of Trade that hire Vietnamese workers;

Diplomatic agencies (Embassies, Consulates General, Consulates, representative agencies...), international organizations or non-governmental organizations, foreign news media, broadcasting and television agencies located in Vietnam that hire Vietnamese workers, except where international treaties to which the Socialist Republic of Vietnam is a party provide otherwise;

Foreign nationals, overseas Vietnamese residing in Vietnam who hire Vietnamese workers according to Decree No. 839/CP dated November 10, 1990 of the Council of Ministers (now the Government).

2. Objects and scope not subject to application:

Vietnamese workers employed in organizations of overseas Vietnamese residents, foreigners residing long-term in Vietnam investing in economic and social fields according to the Law on Encouraging Domestic Investment promulgated on June 22, 1994.

II. Minimum wage, salary scale, pay grade:

1. Minimum wage:

The minimum wage stipulated in Clause 3, Article 3 of Decree No. 197/CP shall be implemented as follows:

a) The minimum wage is the wage paid to workers performing the simplest work (without training) under normal working conditions and environment.

b) The minimum wage is set in US dollars (USD/month).

The current minimum wage is 35 USD/month, applicable to foreign-invested enterprises located in Hanoi and Ho Chi Minh City; 30 USD/month applies to foreign-invested enterprises located in other provinces, cities, districts, towns, or enterprises using many unskilled workers in agriculture, forestry, aquaculture. For industries and occupations where a higher minimum wage has been agreed upon, such higher minimum wage will continue to apply until a new decision is made.

This minimum wage may be applied to workers during their probationary period but not exceeding 60 days as provided in Article 5 of Decree No. 198/CP dated December 31, 1994 of the Government, in cases where the probationary wage is lower than the minimum wage.

The minimum wage must not be used to pay skilled or technical workers who have undergone training.

2. Monthly wage, pay grade, wage allowance:

The salary scale, pay grade, wage level, wage allowance, and wage payment regulations stipulated in Article 22 of Decree No. 197/CP shall be implemented as follows:

a) Enterprises are allowed to establish and implement a salary scale and pay grade system corresponding to the industry or group of industries as prescribed by the Government for domestic enterprises based on the following principles:

The number of levels in the salary scale and pay grade depends on the complexity of the job required, but the coefficient of each level must not be lower than the corresponding coefficient in the salary scales and pay grades applied to domestic enterprises; the multiplier of the salary scale must not be lower than the multiplier of the salary scale applied to industries or groups of industries for domestic enterprises.

The wage level of the first grade in the salary scale and pay grade under normal working conditions must be higher than the minimum wage (30 or 35 USD/month depending on the region and occupation as stipulated in Decision No. 242/LĐTBXH-QĐ dated May 5, 1992 of the Minister of Labor - War Invalids and Social Affairs).

When establishing the salary scale and pay grade system, the enterprise must seek the opinion of the grassroots trade union organization or temporary trade union organization where there is no formal trade union organization, and record it in the collective labor agreement.

b) For newly established enterprises experiencing difficulties in production and business operations and unable to immediately apply the state-prescribed salary scale and pay grade system, within a maximum period of six months, the employer may pay up to 10% - 15% less than the wage calculated according to the corresponding level coefficient in the salary scales and pay grades prescribed by the state for domestic enterprises, but the lowest wage level must not be lower than the minimum wage. Before implementation, the employer must consult the opinion of the grassroots trade union organization or temporary trade union organization where there is no formal trade union organization, and register with the local labor authority. After the prescribed period, the employer must comply with the state's wage regulations.

c) Wage allowances:

Enterprises must implement the following wage allowances:

Regional wage allowance: must not be lower than the wage prescribed by the Government for domestic enterprises in the same area.

The enterprise must implement the following allowances:

Regional allowance: shall not be lower than the wage level prescribed by the Government for domestic enterprises in the same locality;

Overtime allowance: shall not be lower than the level prescribed by the Government for domestic enterprises in the same locality.

Hazardous and dangerous allowance: shall apply to occupations or jobs not specified in the wage scale of the enterprise.

In addition, the enterprise may stipulate additional wage allowances and other benefits to be paid to employees.

The specific wage and allowance levels shall be agreed upon between the employer and employee but must take into account the opinions of the grassroots trade union organization or temporary trade union organization where there is no formal trade union organization, and recorded in the labor contract and collective labor agreement.

d) The employer has the responsibility to establish a wage payment system, which must seek the opinion of the grassroots trade union organization or temporary trade union organization where there is no formal trade union organization before implementation.

e) The determination of wages for positions such as directors (Deputy General Directors) and other key positions within the enterprise shall be as follows:

Principles of determination:

Leaders shall have higher salaries than those they lead;

The business council or the owner of a 100% foreign-owned enterprise shall decide on the salaries of the aforementioned positions;

Vietnamese and foreigners holding equivalent positions shall receive equal pay;

For joint ventures with foreign entities, if hiring a foreigner as Director (General Director) or certain technical and specialized positions that can be filled by Vietnamese workers, the salary shall be agreed upon by both parties, with an additional amount for being away from family and country, the specific amount to be agreed upon by both parties.

f) For special industries such as oil and gas..., the wage scale and wage payment regulations shall be issued after the competent authority proposes the Ministry of Labor, Invalids, and Social Affairs to consider and agree.

g) Employers operating representative offices or foreign individuals of Vietnamese origin residing in Vietnam who hire Vietnamese workers shall base their wage agreements on the provisions mentioned above, using the wage scale, allowance levels for job titles or work positions as the basis for negotiating wages when entering into economic contracts.

III. Wage and Bonus System:

1) Based on the wage payment forms prescribed in Point 5 of Decree No. 197/CP, employers may choose or change the wage payment form suitable for the conditions, nature of work, and production organization of the enterprise. However, this choice or change must be reflected in the collective labor agreement and labor contract, and the salary paid to Vietnamese workers shall be in Vietnamese currency at the exchange rate of the US dollar published by the State Bank of Vietnam at the time of payment.

1) Payment for overtime work according to Clause 1, 2 of Article 8 of Decree No. 197/CP shall be implemented as follows:

a) Scope: applicable to all categories except those working under piece-rate wages based on quota or hourly wages for unstable working hours such as driving cars, river transport, sea transport, air transport, purchasing seafood, agricultural products, food...

b) Calculation of overtime pay:

For employees paid by the hour:

Overtime pay = Hourly wage x Number of overtime hours x 150%

or

200%

+ 150% of the hourly wage of regular working days applied to overtime hours during regular working days.

+ 200% of the hourly wage of regular working days applied to overtime hours during weekly rest days or holidays.

If the employee is granted compensatory leave for overtime hours, the employee only needs to pay the difference of 50% of the hourly wage of regular working days if working overtime during regular working days, or 100% of the hourly wage of regular working days if working overtime during weekly rest days or holidays.

For employees paid by product, after completing the quantity or volume of products according to standard hours (standard hours as defined in Article 3 of Decree No. 195/CP dated December 31, 1994 of the Government), if the employer requests additional work, the unit price of products produced beyond the standard hours shall increase by 50% if produced during regular working days; 100% if produced during weekly rest days or holidays.

3. When working night shifts according to Clause 3, Article 8 of Decree No. 197/CP, employees shall be paid as follows:

a) Rate of payment:

At least 35% shall apply for continuous night work of eight hours or more in a month, regardless of the wage payment form.

At least 30% shall apply for other cases of night work, regardless of the wage payment form.

b) Calculation of additional pay for night work:

For employees paid by the hour:

Additional pay = Hourly wage x Number of night work hours x At least 30%

additional payment = (in accordance with Clause 1, for work performed or at least

Article 5, Decree 197/CP) at night 35%

For workers paid according to piecework or lump-sum wages, if they work overtime at night, the hourly wage rate shall be increased by at least 30% or 35% compared to the daytime wage rate.

Workers who are paid according to piecework or lump-sum wages, if they work overtime at night, the hourly wage rate shall be increased by at least 30% or 35% compared to the daytime wage rate.

In cases where products are produced during night-time overtime, the overtime pay for night-time work shall be calculated as if it were daytime overtime, plus additional pay for working at night.

4. Wage Adjustment System:

a) The decision on wage adjustment for workers shall be made by the employer after consulting with the grassroots trade union or a temporary trade union organization where there is no formal trade union, based on the following principles:

The number of workers eligible for wage adjustments each year in the enterprise depends on job requirements or the time spent working in the enterprise.

The basis for wage grade promotion is technical standards; occupational specialty standards.

b) Conditions for Promotion:

As stipulated in the labor contract, either indefinite term or fixed-term contracts of one year or more; persons holding positions hired by the Board of Directors to manage the enterprise.

The content of wage grade promotion must be included in the labor contract or collective agreement.

The time for considering wage grade promotion is as follows:

+ In enterprises applying the state-prescribed wage scale and salary table, workers must have at least two years (24 months) for positions with an initial salary coefficient (grade 1) lower than 1.78; must have at least three years (36 months) for positions with an initial salary coefficient (grade 1) of 1.78 or higher from the date of initial salary assignment or last wage grade promotion.

+ In enterprises that have not established a wage scale and salary table, for workers with vocational training periods under 24 months, they must have worked for two years (24 months) in the enterprise to be eligible for a wage grade increase of at least 10% of the wage specified in the labor contract; for workers with vocational training periods of 24 months or more, they must have worked for three years (36 months) in the enterprise to be eligible for a wage grade increase of at least 7% of the wage specified in the labor contract.

+ For diligent and effective workers, employers may promote them earlier than the prescribed period.

c) Promotion:

Workers eligible for promotion must undergo a promotion examination organized by the enterprise:

The promotion examination for skilled workers is the technical grade standard corresponding to the job they undertake.

The promotion examination for administrative and service staff is the occupational specialty standard.

In cases where the enterprise has not established technical grade standards or occupational specialty standards, the employer must temporarily set some economic and technical indicators, or professional standards closely related to the job content or assigned responsibilities, based on consultations with the grassroots trade union or representatives of the workforce where there is no formal trade union.

d) The wage grade increase shall follow the wage scale and salary table established by the enterprise. The wage increase decision takes effect from the date it is signed.

e) From now on, enterprises shall base their annual promotion plans on this Circular within their production and business plans to organize examinations and make decisions on wage grade promotions for those eligible within their management.

5. The deduction for bonuses from remaining profits according to Clause 2, Article 9 of Decree No. 197/CP shall be implemented as follows:

a) Eligible recipients for bonuses:

Workers who have worked in the enterprise for one year or more.

Contributing to the enterprise's production and business results.

b) Bonus level for one year shall not be less than one month's wage as stated in the labor contract.

c) Bonus regulations: Enterprises must establish bonus regulations based on the following principles:

Based on the effectiveness of the worker's contribution to the enterprise reflected through productivity and quality of work;

Based on the time worked in the enterprise, those with longer tenure receive more benefits;

Compliance with the enterprise's labor discipline regulations.

The bonus regulation must take into account the opinions of the grassroots trade union or a temporary trade union organization where there is no formal trade union.

6. Payment of wages during stoppages according to Clause 3, Article 12 of Decree No. 197/CP shall be implemented as follows:

During a shift, if work stops for two hours or more, payment shall be made for the hour when the stoppage occurs; if the stoppage continues until the end of the shift, full payment for the shift shall be made; if work is completed for the week or month, full payment for the week or month shall be made, the wage rate for stoppage payment shall be the wage rate of the previous month and shall be calculated according to the corresponding wage forms as stipulated in Clause 1, Article 5 of Decree No. 197/CP.

IV. Implementation Organization:

1. According to this Circular, foreign-invested enterprises, enterprises in export processing zones and industrial parks, and foreign organizations in Vietnam should promptly establish wage scales and levels and register with the Department of Labor - Invalids and Social Affairs and report to the State Committee for Cooperation and Investment.

2. Monthly, employers are responsible for reporting to local labor authorities and financial authorities about actual income, including: wages, bonuses, and other income (if any), based on the number of workers in the enterprise.

Provincial Departments of Labor - Invalids and Social Affairs shall coordinate with provincial Trade Union Federations; Provincial Economic Foreign Relations Departments; Management Boards of Export Processing Zones and Industrial Parks, and agencies authorized by the State to inspect the implementation of this Circular.

This Circular shall take effect from January 1, 1995. All previous regulations contrary to this Circular are abolished.

Any difficulties encountered during implementation should be reported promptly to the Ministry of Labor - Invalids and Social Affairs for study and resolution.